Analysis Of The Effectiveness Of The Limited Liability Company's Stock Transfer Contract With Flaws

Stock rights, as the significant legal carriers of social property, have more and more frequently become objects in the property transfer relationship. However, in the modern society with plenty of limited liability companies, there are also a great many stock rights transfer disputes, which resulted from breaking rules of corporation law due to stock rights transfers, or violating legal or agreed share transfer limited terms. The situation, in which, the effectiveness of the stock transfer contracts absent of laws and regulations because of breaking rules of corporation law or violating legal or agreed stock rights transfer limited terms (here referred to as limited liability company's stock transfer contract with flaws), leads to different determinations of the judicial organs to this problem, severely dampens investors'investment enthusiasms, and is against companies'positive development.This article is about a study on the effectiveness of the limited liability company's stock transfer contract with flaws and puts forward that the effectiveness of the contract with flaws should be defended as possible. It emphasizes that in the situation of external equity transfer by shareholders, other shareholders mainly through the right of preemption protect company's human‐joining, and by analyzing the nature of the preemption right get to the conclusion that shareholder's preemption right is the formation right. Based upon the conclusion, the author's opinion is that, when the shareholder signs a share transfer contract with a third party in violation of the legal or agreed limited terms, other shareholders may exercise the preemption right to the original shareholder within a reasonable time after they know or should have known the situation. Because of the nature of the formation right of the preemption, a share transfer contract is created between the original shareholder and the shareholder who exercised preemption rights as soon as the original shareholder receives the notice from the shareholder who exercised preemption rights, and the content of the new contract is in conformity with that of the share transfer contract formerly created between the original shareholder and the third party. Therefore, the share transfer contract between the original shareholder and the third party does not harm the preemption rights of other shareholders, and shall be valid. Just because other shareholders exercise the preemption rights, considering the human‐joining of limited liability companies, the laws shall preferentially execute the share transfer agreement between the original shareholder and the shareholder exercising preemption rights. The third party may plead for termination of the share transfer contract with the original shareholder for the reason of incapable of fulfilling the contract, and demand the original shareholder to take the responsibility for breach of the contract.